Financial Statements and Independent Auditors' Report September 30, 2011 and 2010

Transcription

1 Financial Statements and Independent Auditors' Report September 30, 2011 and 2010

2 Table of Contents Independent Auditors' Report...1 Financial Statements Page Statements of Financial Position...3 Statements of Activities...4 Statements of Cash Flows...5 Notes to Financial Statements...6 Supplementary Information Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards...14 Report on Compliance with Requirements That Could Have a Direct and Material Effect on Each Major Program and on Internal Control Over Compliance in Accordance with OMB Circular A Schedule of Findings and Questioned Costs...18 Schedule of Expenditures of Federal Awards...20 Notes to Schedule of Expenditures of Federal Awards...22

3 INDEPENDENT AUDITORS' REPORT To the Board of Directors Earth Force Inc. Denver, Colorado We have audited the accompanying statement of financial position of Earth Force Inc. ("Earth Force") (a Delaware non-profit corporation) as of September 30, 2011 and the related statements of activities and cash flows for the year then ended. These financial statements are the responsibility of Earth Force's management. Our responsibility is to express an opinion on these financial statements based on our audit. The financial statements of Earth Force as of September 30, 2010 were audited by other auditors whose report dated June 29, 2011 expressed an unqualified opinion. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purposes of expressing an opinion on the effectiveness of Earth Force's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements and assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall consolidated financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Earth Force Inc. as of September 30, 2011 and the changes in its net assets and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America. In accordance with Government Auditing Standards, we have also issued our report dated April 26, 2012 on our consideration of Earth Force's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, grant agreements, and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit.

4 To the Board of Directors Earth Force Inc. Page Two Our audit was performed for the purpose of forming an opinion on the financial statements. The accompanying schedule of expenditures of federal awards is presented for purposes of additional analysis as required by U.S. Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations, and is not a required part of the financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain other procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves and other additional procedures in accordance with the auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the financial statements as a whole. April 26, 2012 Denver, Colorado Ehrhardt Keefe Steiner & Hottman PC

5 Statements of Financial Position September 30, Assets Current assets Cash and cash equivalents $ 624,744 $ 1,171,258 Grants receivable 273, ,254 Promises to give - 169,881 Other current assets 14,705 4,522 Inventory Total current assets 913,270 1,556,601 Investments 219, ,391 Property and equipment, net - 1,305 Total assets $ 1,133,060 $ 1,794,297 Liabilities and Net Assets Liabilities Accounts payable and accrued expenses $ 114,657 $ 141,257 Deferred revenue Obligations under gift annuity agreement 23,695 39,102 Total liabilities 138, ,259 Net assets Unrestricted 810,042 1,196,987 Temporarily restricted 184, ,051 Total net assets 994,708 1,613,038 Total liabilities and net assets $ 1,133,060 $ 1,794,297 See notes to financial statements

6 Statements of Activities For the Years Ended September 30, 2011 September 30, 2010 Temporarily Permanently Temporarily Permanently Unrestricted Restricted Restricted Total Unrestricted Restricted Restricted Total Revenues, gains, and other support Grants and contributions $ 252,003 $ 448,947 $ - $ 700,950 $ 893,090 $ 716,636 $ - $ 1,609,726 Government grants 800, , , ,991 Product sales, net of cost of goods sold of $6,609 (2011) and $11,873 (2010) 32, ,446 18, ,928 In-kind contributions 162, , , ,731 Other income 46, ,682 76, ,456 Unrealized (loss) gain on investments (16,601) - - (16,601) 21, ,989 Interest income 4, ,164 7, ,702 Change in net present value of gift annuities 10, , Net assets released from restrictions due to satisfaction of program expenditure requirements 680,332 (680,332) ,485 (523,485) - - Total revenue, gains, and other support 1,972,305 (231,385) - 1,740,920 2,506, ,151-2,699,523 Expenses Program services 2,001, ,001,572 2,151, ,151,463 Supporting services General and administrative 104, , , ,293 Fundraising 253, , , ,258 Total expenses 2,359, ,359,250 2,527, ,527,014 Change in net assets before transfer of beneficial interest (386,945) (231,385) - (618,330) (20,642) 193, ,509 Transfer of beneficial interest (56,389) (56,389) Change in net assets (386,945) (231,385) - (618,330) (20,642) 193,151 (56,389) 116,120 Net assets at beginning of year 1,196, ,051-1,613,038 1,217, ,900 56,389 1,496,918 Net assets at end of year $ 810,042 $ 184,666 $ - $ 994,708 $ 1,196,987 $ 416,051 $ - $ 1,613,038 See notes to financial statements

7 Statements of Cash Flows For the Years Ended September 30, Cash flows from operating activities Change in net assets $ (618,330) $ 116,120 Adjustments to reconcile change in net assets to net cash used in operating activities Net realized and unrealized loss (gain) on investments 16,601 (21,989) Depreciation 1,305 7,570 Bad debt expense 16,779 - Loss on sale of fixed assets Change in value of gift annuity (10,597) - Changes in assets and liabilities Grants receivable (80,346) (188,695) Promises to give 169,881 91,896 Other current assets (10,183) 16,357 Inventory 686 (686) Accounts payable and accrued expenses (26,600) (44,874) Deferred revenue (900) (5,544) 76,626 (145,719) Net cash used in operating activities (541,704) (29,599) Cash flows from investing activities Sale of investments - 239,945 Transfer of beneficial interest - 56,389 Net cash provided by investing activities - 296,334 Cash flows from financing activities Payments on gift annuity (4,810) - Net cash used in financing activities (4,810) - Net (decrease) increase in cash and cash equivalents (546,514) 266,735 Cash and cash equivalents at beginning of year 1,171, ,523 Cash and cash equivalents at end of year $ 624,744 $ 1,171,258 See notes to financial statements

8 Notes to Financial Statements Note 1 - Organization and Summary of Significant Accounting Policies Organization Earth Force Inc. ("Earth Force") was incorporated under the laws of the state of Delaware in Its primary mission is to help youth learn about the environment and their community and to take civic action to address issues they see there. Earth Force's mission is to engage young people as active citizens who improve the environment and their communities now and in the future. All programs include the fundamental elements of youth decision-making, civic engagement, environmental action, and service-learning. Earth Force has an office in Denver, Colorado, and staff working virtually across the country in over 50 communities. States where Earth Force currently supports partners and programs include: Colorado, Michigan, Indiana, Ohio, Kansas, New York, Delaware, Illinois, Kentucky, Tennessee, Louisiana, North Carolina, South Carolina, California, Tennessee, Pennsylvania, Missouri, Florida, and Texas. Earth Force's activities are funded primarily through grants and contributions. FrontRange Earth Force ("FrontRange") was dissolved into Earth Force at the beginning of the 2011 fiscal year. Prior to 2011, FrontRange was an independent non-profit founded and incorporated under the laws of the state of Colorado in Its primary mission was to design, implement, maintain, and evaluate Earth Force programs in the Denver area. FrontRange consolidated with Earth Force on the basis of common control and economic interest. All significant intercompany balances and transactions were eliminated. Basis of Presentation The accompanying financial statements have been prepared on the accrual basis of accounting and, accordingly, reflect all receivables, payables, and other liabilities. Earth Force reports information regarding its financial position and activities according to three classes of net assets: unrestricted net assets, temporarily restricted net assets, and permanently restricted net assets. Unrestricted amounts are those currently available at the discretion of the Board of Directors for use in Earth Force's operations. Temporarily restricted amounts are monies restricted by donors specifically for certain time periods, purposes, or programs. Permanently restricted amounts are assets that must be maintained permanently by the Earth Force as required by the donor; but Earth Force is permitted to use or expend part or all of any income derived from those assets. Earth Force does not currently maintain any permanently restricted net assets. Cash and Cash Equivalents Earth Force considers all demand deposits and highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. At September 30, 2011, all deposits were fully insured by the Federal Deposit Insurance Corporation

9 Notes to Financial Statements Note 1 - Organization and Summary of Significant Accounting Policies (continued) Grants Receivable Government contracts receivable consist primarily of amounts from federal and state governments. Government contracts receivable are stated at the amount management expects to collect from outstanding balances. Earth Force considers the receivable amounts to be fully collectible; accordingly, no allowance for doubtful accounts is deemed necessary. Balances that are still outstanding after management has used reasonable collection efforts are written off through a charge to bad debt expense. Investments Investments in equity securities with readily determinable fair values and all investments in debt securities are reported at their fair values in the statements of financial position. Investment income, gains, and losses are reported in the statements of activities. Property and Equipment Property and equipment is stated at cost or, if donated, at fair market value at the date of donation. Depreciation is provided utilizing the straight-line method over the estimated useful lives for owned assets, ranging from 3 to 15 years, and related lease terms for leasehold improvements. Expenditures for major repairs and improvements are capitalized; expenditures for minor repairs and maintenance are expenses when incurred. It is the policy of Earth Force to capitalize all purchases of $5,000 and greater. Contributions Contributions are recognized as unrestricted or temporarily restricted when received, depending on the existence and nature of donor restrictions. When restrictions are satisfied, revenues are reclassified and reported as net assets released from restrictions. Donor-restricted contributions whose restrictions are met in the same reporting period are reported as unrestricted support. In-Kind Donations In-kind donations of property, materials, and personal services are recorded at estimated fair value at date of receipt. These donations (other than contributions of property and equipment) are included as program costs to properly reflect the total cost of the particular program. Donated marketable securities and other non-cash donations are recorded as contributions at their estimated fair values at the date of donation

10 Notes to Financial Statements Note 1 - Organization and Summary of Significant Accounting Policies (continued) Income Taxes Earth Force is exempt from federal income taxes under Section 501(c)(3) of the Internal Revenue Code. Income from activities not directly related to Earth Force's tax-exempt purpose is subject to taxation as unrelated business income. There were no unrelated business income taxes in 2011 and Earth Force applies a more-likely-than-not measurement methodology to reflect the financial statement impact of uncertain tax positions taken or expected to be taken in the tax return. After evaluating the tax positions taken, none are considered to be uncertain; therefore, no amounts have been recognized as of September 30, 2011 and If incurred, interest and penalties associated with tax positions would be recorded in the period assessed as general and administrative expense. No interest or penalties have been assessed as of September 30, 2011 and Tax years that remain subject to examination include 2008 through the current year. Functional Expenses The costs of providing the various programs and activities have been summarized on a functional basis in the accompanying statements of activities. Accordingly, certain costs have been allocated among the program and supporting services benefited. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue, expenses, gains, losses, and other changes in net assets during the reporting period. Actual results could differ from those estimates. Subsequent Events Earth Force has evaluated events through April 26, 2012, which is the date the consolidated financial statements were available to be issued, noting the following subsequent event: Subsequent to year-end, Earth Force entered into an agreement to acquire the operations of Next Steps, another non-profit Organization

11 Notes to Financial Statements Note 2 - Fair Value Measurements and Investments Earth Force values its financial assets and liabilities based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The following fair value hierarchy prioritizes observable inputs used to measure fair value into three broad levels, which are described below: Level 1: Level 2: Level 3: Quoted prices in active markets are accessible at the measurement date for assets or liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs. Observable prices are based on inputs not quoted on active markets, but corroborated by market data. Unobservable inputs are used when little or no market data is available. In determining fair value, Earth Force utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible, as well as considers counterparty credit risk in its assessment of fair value. These classifications (Levels 1, 2, and 3) are intended to reflect the observability of inputs used in the valuation of investments and are not necessarily an indication of risk or liquidity. The following is a description of the valuation methodologies used for assets measured at fair value. There have been no changes in the methodologies used at September 30, 2011 and Mutual funds: Valued at the closing price reported on the active market on which the individual securities are traded. Financial assets carried at fair value are classified in the tables below in one of the three categories described above: September 30, 2011 Description Level 1 Level 2 Level 3 Total Mutual funds Large blend $ 62,239 $ - $ - $ 62,239 Foreign large blend 60, ,971 Market neutral 33, ,236 Diversified emerging market 29, ,857 Small value 18, ,905 Long-term bond 14, ,582 $ 219,790 $ - $ - $ 219,

12 Notes to Financial Statements Note 2 - Fair Value Measurements and Investments (continued) September 30, 2010 Description Level 1 Level 2 Level 3 Total Mutual funds Large blend $ 64,560 $ - $ - $ 64,560 Foreign large blend 67, ,825 Market neutral 33, ,348 Diversified emerging market 38, ,068 Small value 19, ,352 Long-term bond 13, ,238 $ 236,391 $ - $ - $ 236,391 Investment return consists of unrealized (loss) gain for the years ending September 30, 2011 and 2010 in the amount of $(16,601) and $21,989, respectively. Note 3 - Property and Equipment The Earth Force's property and equipment is comprised of the following: September 30, Furniture and equipment $ 53,341 $ 53,341 Computers and software 4,839 4,839 Leasehold improvements 13,000 13,000 71,180 71,180 Less accumulated depreciation (71,180) (69,875) $ - $ 1,305 Depreciation expense for the years ended September 30, 2011 and 2010 was $1,305 and $7,570, respectively. Note 4 - Obligations Under Gift Annuity Agreement Earth Force is the trustee for certain split-interest arrangements, including charitable gift annuity contracts. A charitable gift annuity provides for the payment of distributions to the grantor or other designated beneficiaries over the contract's term (usually the designated beneficiary's lifetime). At the end of the contract term, the remaining assets are available for Earth Force's use. The portion of the contract attributable to the future interest of Earth Force is recorded in the statements of activities as temporarily restricted contributions in the period the contract is established

13 Notes to Financial Statements Note 4 - Obligations Under Gift Annuity Agreement (continued) Assets held under gift annuity contracts are recorded at fair value in investments in Earth Force's statements of financial position. Earth Force makes distributions to the designated beneficiaries in accordance with the gift instrument and revalues the liability based on actuarial assumptions on an annual basis. The present value of the estimated future payments is calculated using the Internal Revenue Service ("IRS") discount rate and applicable mortality tables. Subsequent to year end, the charitable gift annuity was terminated. Note 5 - Retirement Plan The Earth Force sponsors a 401(k) retirement plan (the "Plan") that covers all employees. The Plan is available to employees who work 24 hours or more a week. Employees may contribute amounts based on the limits established by the IRS. The Plan provides for discretionary employer matching contributions. As of September 30, 2011 and 2010, employer matching contributions were determined to be up to $1,500 per qualifying employee on an annual basis which have been paid for by forfeitures available in the Plan. Plan participants become 100% vested in employer contribution to the Plan after three years of employment. Note 6 - Commitments and Contingencies The Earth Force leases office space under a non-cancelable operating lease with monthly payments of $900. The lease expires in December Rent expense for the years ended September 30, 2011 and 2010 was $28,713 and $21,770, respectively. Future minimum lease payments are approximately as follows: For the Year Ending September 30, 2012 $ 10, ,700 $ 13,

14 Notes to Financial Statements Note 7 - Temporarily Restricted Net Assets Temporarily restricted net assets are comprised of the following: September 30, Community programs $ 64,750 $ 53,500 Water based programs 46,281 48,832 Earth Force programs 29, ,500 FrontRange programs 23,683 25,597 Urban environment challenge 10, ,715 General operations 10,000 15,989 Watershed programs - 3,918 Total $ 184,666 $ 416,

15 SUPPLEMENTARY INFORMATION

16 REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS To the Board of Directors Earth Force Inc. Denver, Colorado We have audited the financial statements of Earth Force Inc. ("Earth Force") as of and for the year ended September 30, 2011 and have issued our report thereon dated April 26, We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. INTERNAL CONTROL OVER FINANCIAL REPORTING Management of Earth Force is responsible for establishing and maintaining effective internal control over financial reporting. In planning and performing our audit, we considered Earth Force's internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of Earth Force's internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of Earth Force's internal control over financial reporting. A deficiency in internal control over financial reporting exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected, on a timely basis. Our consideration of internal control over financial reporting was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over financial reporting that might be deficiencies, significant deficiencies, or material weaknesses. We did not identify any deficiencies in internal control over financial reporting that we consider to be material weaknesses, as defined above

17 To the Board of Directors Earth Force Inc. COMPLIANCE AND OTHER MATTERS As part of obtaining reasonable assurance about whether Earth Force's financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, non-compliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit; accordingly, we do not express such an opinion. The results of our tests disclosed no instances of non-compliance or other matters that are required to be reported under Government Auditing Standards. We noted certain matters that we reported to management of the Earth Force in a separate letter dated April 26, This report is intended solely for the information and use of the finance committee, management, Board of Directors, and federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties. April 26, 2012 Denver, Colorado Ehrhardt Keefe Steiner & Hottman PC

18 REPORT ON COMPLIANCE WITH REQUIREMENTS THAT COULD HAVE A DIRECT AND MATERIAL EFFECT ON EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A-133 To the Board of Directors Earth Force Inc. Denver, Colorado COMPLIANCE We have audited Earth Force, Inc.'s ("Earth Force") compliance with the types of compliance requirements described in the U.S. Office of Management and Budget ("OMB") Circular A-133, Compliance Supplement, that could have a direct and material effect on each of its major federal programs for the year ended September 30, Earth Force's major federal programs are identified in the summary of auditor's results section of the accompanying schedule of findings and questioned costs. Compliance with the requirements of laws, regulations, contracts, and grants applicable to each of its major federal programs is the responsibility of Earth Force's management. Our responsibility is to express an opinion on Earth Force's compliance based on our audit. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States; and OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. Those standards and OMB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether non-compliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about Earth Force's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit does not provide a legal determination of Earth Force's compliance with those requirements. In our opinion, Earth Force complied, in all material respects, with the requirements referred to above that could have a direct and material effect on each of its major federal programs for the year ended September 30,

19 To the Board of Directors Earth Force Inc. INTERNAL CONTROL OVER COMPLIANCE Management of Earth Force is responsible for establishing and maintaining effective internal control over compliance with the requirements of laws, regulations, contracts, and grants applicable to federal programs. In planning and performing our audit, we considered Earth Force's internal control over compliance with requirements that could have a direct and material effect on a major federal program to determine the auditing procedures for the purpose of expressing our opinion on compliance and to test and report on internal control over compliance in accordance with OMB Circular A-133, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of Earth Force's internal control over compliance. A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, non-compliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material non-compliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be significant deficiencies or material weaknesses. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses, as defined above. This report is intended solely for the information and use of the finance committee, management, Board of Directors, and federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties. April 26, 2012 Denver, Colorado Ehrhardt Keefe Steiner & Hottman PC

20 Schedule of Findings and Questioned Costs Year Ended September 30, 2011 Section I - Summary of Audit Results Financial Statements Type of auditors' report issued - Unqualified Internal control over financial reporting: Material weakness(es) identified? Yes No Significant deficiencies identified? Yes None reported Non-compliance material to financial statements noted? Yes No Federal Awards Internal control over major programs: Material weakness(es) identified? Yes No Significant deficiencies identified? Yes None reported Type of auditors' report issued on compliance for major programs - Unqualified Any audit findings disclosed that are required to be reported in accordance with section 510(a) of OMB Circular A-133? Yes No Identification of major programs: Name of Program Corporation for National and Community Service - Learn and Serve America School and Community Based Programs, Project No. 085SHC001, 09KSWCO001 Corporation for National and Community Service - Learn and Serve America Innovative Community-Based Service-Learning Programs, Project No. 10LYWCO001 CFDA# Dollar threshold used to distinguish between type A and B programs: $300,000 Auditee qualified as a low-risk auditee? Yes No Section II - Financial Statement Findings. None. Section III - Federal Award Findings and Questioned Costs None

21 Schedule of Findings and Questioned Costs Year Ended September 30, 2011 Section IV - Prior Year Findings and Questioned Costs - Major Federal Award Programs Audit Finding : Adjusting Journal Entries - Material Weakness Status: Management implemented a review process to ensure significant entries were posted to the accounting records prior to the audit being performed

22 Schedule of Expenditures of Federal Awards For the Year Ended September 30, 2011 Federal Grantor/Pass Federal Contract Federal Expenditures September 30, Through Grantor Program Title Number Number 2011 Department of Commerce National Oceanic and Atmospheric Administration (NOAA) Passed through: PA Dept of Environmental Protection Coastal Zone Management Administration Awards PD.10 $ 13,333 Total Department of Commerce National Oceanic and Atmospheric Administration (NOAA) $ 13,333 Environmental Protection Agency Region 3 Region 3 Environmental Priority Projects R $ 33,792 Office of Enforcement and Compliance Assurance Environmental Justice Small Grant Program EQ ,049 Office of the Administrator Environmental Education Grants NE ,506 Total Environmental Protection Agency $ 99,347 Department of Energy Passed through: Colorado Governor's Energy Office State Energy Program DE-EE $ 15,000 Total Department of Energy $ 15,000 Department of Education Office of Innovation and Improvement Passed through: Hillsborough County School District Voluntary Public School Choice A 10-SLC04-D $ 46,183 Total Department of Education Office of Innovation and Improvement $ 46,

23 Schedule of Expenditures of Federal Awards For the Year Ended September 30, 2011 Federal Grantor/Pass Federal Contract Federal Expenditures September 30, Through Grantor Program Title Number Number 2011 Corporation for National and Community Service Learn and Serve America School and Community Based Programs Passed through: Charleston School District Passed through: Colorado Department of Education, Denver Public Schools, Odyssey School Passed through: Colorado Department of Education, Denver Public Schools, Office of Post-Secondary Readiness Learn and Serve America School and Community Based Programs * 08KSHCO001 $ 224,814 Learn and Serve America School and Community Based Programs * James Island 2,927 Learn and Serve America School and Community Based Programs * 09KSWCO001 18,602 Learn and Serve America School and Community Based Programs * 09KSWCO001 10,902 Total ,245 Volunteers in Service to America Volunteers in Service to America VSAPA010 13,381 Learn and Serve America Innovative Community- Based Service-Learning Programs Learn and Serve America Innovative Community-Based Service-Learning Programs * 10LYWCO ,012 Total Corporation for National and Community Service $ 556,638 Total $ 730,501 * Major Program

24 Notes to Schedule of Expenditures of Federal Awards For the Year Ended September 30, 2011 (1) Basis of Presentation The supplemental schedule of expenditures of federal awards has been prepared on an accrual basis. The information in this schedule is presented in accordance with the requirements of OMB Circular A-133, Audits of States, Local Governments, and Not-for-Profit Organizations. (2) Reconciliation to Financial Statements The Earth Force receives grants from non-federal and other sources in addition to its federal awards. The amount of federal awards reconciles to the revenue in the statement of activities as follows for the year ended September 30, 2011: Government grants Federal revenue/expenditures $ 730,501 Non-federal and other grants 69,533 Total government grants revenue $ 800,